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1. Company Snapshot

1.a. Company Description

The North West Company Inc., through its subsidiaries, engages in the retail of food and everyday products and services to rural communities and urban neighborhood markets in northern Canada, rural Alaska, the South Pacific, and the Caribbean.The company's Canadian operations comprise 118 Northern stores, which offers food, financial services, and general merchandise; 5 NorthMart stores that provides fresh foods, apparel, and health products and services; 26 Quickstop convenience stores that provides ready-to-eat foods, and fuel and related services; 5 Giant Tiger junior discount stores, which offers family fashion, household products, and food; 2 Valu Lots discount center and direct-to-customer food distribution outlet; 1 solo market, a store in remote market; 3 Pharmacy and Convenience stores; and 1 North West Company motorsports dealership offering sales, service, parts and accessories for Ski-doo, Honda, Can-am and other premier brands.The Canadian operations also provides contract tele-pharmacist services to rural hospitals and health centers; water and air-based transportation services; and produce and fresh meats to independent grocery stores.


Its international operations include 30 Alaska Commercial Company stores that provides food and general merchandise to remote and rural regions; 12 Cost-U-Less mid-size warehouse stores, which offers discount food and general merchandise; 4 Quickstop convenience stores; 9 Riteway food markets; and Pacific Alaska wholesale, a distributor to independent grocery stores, commercial accounts, and individual households in rural Alaska.The North West Company Inc.was founded in 1668 and is headquartered in Winnipeg, Canada.

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1.b. Last Insights on NWC

The recent performance of The North West Company Inc. was driven by a strong first quarter, with revenue increasing 3.9% year-over-year to CA$641.4 million. The company's earnings per share (EPS) also beat expectations, reflecting the continued momentum across its business. Additionally, the Board of Directors declared a quarterly dividend of $0.40, providing a reliable source of income for shareholders. The company's resilience in navigating trade uncertainties and its ability to leverage strategic supply chain adjustments have contributed to its strong performance.

1.c. Company Highlights

2. North West Company's Q2 2026 Financial Performance

North West Company's Q2 2026 financial results showed a mixed performance, with flat consolidated sales and a 1.8% decline in Canadian same-store sales due to wildfires and reduced government funding. Earnings per share (EPS) came in at $0.78, slightly below estimates of $0.839. Gross profit remained flat, while expenses decreased by 0.1%, resulting in a 1.9% increase in net earnings.

Publication Date: Sep -10

📋 Highlights
  • Canadian Sales Impact: Canadian same-store sales declined 1.1% YoY (vs. 4.3% growth prior), driven by wildfires affecting 16 stores (-1.9% food sales) and reduced funding from Jordan's Principle/ICFI programs.
  • Segment Performance: General merchandise/other sales rose 5.6% YoY (offsetting -1.9% food decline), fueled by airline cargo/passenger revenue (+10% QoQ) and pharmacy sales growth.
  • Gross Profit/Net Earnings: Gross profit flat YoY; expenses down 0.1% (lower share-based compensation), enabling 1.9% net earnings increase despite headwinds.
  • International Challenges: International sales fell 0.8% YoY due to weaker Alaskan and South Pacific economies, with tourism/fisheries declines and pre-SNAP policy impacts.
  • Future Uncertainties: Wildfires expected to remain a net negative in Q3; funding program resumptions and tariffs pose risks, though Next 100 program costs are largely offset (partial EBIT impact deferred).

Financial Highlights

The company's gross margin was impacted by markdowns and shrink, partially offset by better operating expenses. The wildfires in Canada contributed to higher third-party airline revenue. Inventory levels are up year-over-year and sequentially, but executives feel prepared to meet demand from a $23 billion settlement.

Valuation Metrics

North West Company's current valuation metrics are as follows: P/E Ratio at 23.54, P/B Ratio at 4.26, P/S Ratio at 1.24, EV/EBITDA at 10.93, Dividend Yield at 2.37%, Free Cash Flow Yield at 3.64%, ROIC at 12.47%, ROE at 18.45%, and Net Debt / EBITDA at 1.05. These metrics indicate that the company's stock is trading at a premium, with a relatively high P/E ratio, but with a reasonable dividend yield and a decent return on equity.

Operational Updates

The company's private label initiatives are in early rollout, with positive customer reception and full implementation planned for late October. The airline operations showed stable cargo and passenger revenue, and the Next100 program advanced with technology rollouts and private-label expansions. Management noted partial cost offset from Next100 but deferred quantifying long-term EBIT impacts.

Outlook

The company remains cautious about Alaska's economic outlook, citing headwinds such as tourism declines, fisheries impacts, and pre-SNAP changes. However, potential recovery from military spending and programs is expected. Analysts estimate next year's revenue growth at 0.8%, indicating a relatively stable outlook for the company.

3. NewsRoom

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Is North West (TSX:NWC) Undervalued After Its Recent 10% Monthly Share Price Gain?

Dec -04

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The North West Company Inc. Third Quarter Results and Conference Call

Dec -03

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Posthaste: Canadians say hands off our resources, putting sovereignty before foreign dollars

Dec -01

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The North West Company Renews Normal Course Issuer Bid

Nov -21

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The North West Company Inc. Announces Renewal of its Normal Course Issuer Bid

Nov -21

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Are The North West Company Inc.'s (TSE:NWC) Fundamentals Good Enough to Warrant Buying Given The Stock's Recent Weakness?

Oct -28

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Undiscovered Gems In Canada Featuring Birchcliff Energy And Two More Small Caps

Oct -01

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North West Co Price Target Lowered to $58 at CIBC

Sep -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.27%)

6. Segments

Food

Expected Growth: 4.5%

The North West Company Inc.'s Food segment growth of 4.5% is driven by increasing demand for fresh produce and meat in rural Canada, expansion of store formats, and strategic pricing. Additionally, the company's focus on private label products and loyalty programs contributes to the growth. Furthermore, investments in e-commerce and digital capabilities enhance customer experience, driving sales and revenue growth.

General Merchandise and Other

Expected Growth: 3.5%

The 3.5% growth in General Merchandise and Other segment of The North West Company Inc. is driven by increasing demand for everyday essentials, expansion into new markets, and strategic pricing initiatives. Additionally, the company's focus on improving in-store experience, investing in e-commerce capabilities, and enhancing supply chain efficiency have contributed to the growth.

7. Detailed Products

Food

The North West Company Inc. offers a wide range of food products, including dry goods, meat, dairy products, and fresh produce, catering to the needs of remote and rural communities.

General Merchandise

The company provides a variety of general merchandise, including clothing, footwear, and household essentials, to meet the daily needs of its customers.

Pharmacy and Health Services

The North West Company offers pharmacy services and health products, including prescription medication, over-the-counter medications, and health supplements.

Financial Services

The company provides financial services, including credit, debit, and gift cards, as well as money transfer services.

Lottery and Gaming

The North West Company offers lottery tickets and gaming products, providing entertainment options for its customers.

Fuel and Petroleum Products

The company supplies fuel and petroleum products, including gasoline, diesel, and heating fuel, to meet the energy needs of its customers.

8. The North West Company Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The North West Company Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for The North West Company Inc. is low due to the lack of concentration of buyers in the market.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The North West Company Inc. is medium due to the moderate concentration of suppliers in the market.

Threat Of New Entrants

The threat of new entrants for The North West Company Inc. is high due to the low barriers to entry in the market.

Intensity Of Rivalry

The intensity of rivalry for The North West Company Inc. is high due to the high level of competition in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.54%
Debt Cost 6.43%
Equity Weight 69.46%
Equity Cost 7.05%
WACC 6.86%
Leverage 43.96%

11. Quality Control: The North West Company Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Value: 7.4

Growth: 4.9

Quality: 4.7

Yield: 7.0

Momentum: 8.5

Volatility: 7.7

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CHS

A-Score: 6.2/10

Value: 6.2

Growth: 3.7

Quality: 3.6

Yield: 10.0

Momentum: 3.5

Volatility: 10.0

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A-Score: 6.2/10

Value: 7.6

Growth: 4.7

Quality: 5.1

Yield: 4.0

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Volatility: 8.0

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North West Company

A-Score: 5.7/10

Value: 5.7

Growth: 5.2

Quality: 5.6

Yield: 7.0

Momentum: 2.0

Volatility: 9.0

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Value: 4.8

Growth: 6.6

Quality: 4.7

Yield: 6.0

Momentum: 9.0

Volatility: 3.0

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Ingles Markets

A-Score: 5.4/10

Value: 5.7

Growth: 4.8

Quality: 4.2

Yield: 2.0

Momentum: 7.0

Volatility: 8.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

48.56$

Current Price

48.56$

Potential

-0.00%

Expected Cash-Flows